China factory activity grows for first time in six months

51
2
China factory activity grows for first time in six months

China's factory activity has grown for the first time in six months of September, an official survey showed on Saturday, adding to a run of indicators suggesting the world's second-largest economy has begun to bottom out.

According to National Bureau of Statistics, the purchasing manager index rose from 49.7 in September to 50.2, edging beyond the 50-point range demarcating contraction in activity from expansion. The PMI, the first official data for September, is adding to signs of stabilization in the economy, which had sagged after a initial burst of momentum early in the year when China's COVID-19 policies were lifted.

Preliminary signs of improvement have emerged in August, with industrial output and retail sales growth accelerating, while declines of exports and imports narrowed and deflationary pressures eased. In August, profits at industrial firms surged 17.2 percent, reversing the decline of July's 6.7 percent.

China's non-manufacturing PMI, which includes sub-indices for service sector activity and construction, also rose, coming in at 51.7 compared to August's 51.0.

In September, the composite PMI rose to 52.0, up from 51.3.

Consumer spending for the longest public holiday in the year has been closely watched by economists, a near-term data on the radar of economists. On Friday, the Mid-Autumn Festival, which will run through October 6, will kick off.

Passenger travel by rail on Friday hit 20 million trips, a single-day record, state media reported on Saturday, in a bullish start to what authorities had predicted to be the most popular Golden Week in history.

Policymakers are welcoming more stable economic indicators as they grapple with a property sector debt crisis that has shattered global markets. The authorities have announced a range of measures to shore up the property market, including lowering mortgage rates, although the sector is far from being out of the woods.

The rate of newly purchased properties fell fastest in 10 months in August, and property investment fell for an 18th consecutive month.

China's Evergrande Group, the world's most indebted property developer with more than $300 billion in debt, said its founder was being investigated over suspected 'illegal crimes'.

The Asian Development Bank trimmed its 2023 economic growth forecast for China to 4.9 percent from a July forecast of 5 percent due to the weakening in the property sector.

Analysts say more policy support is required to ensure China's economy can hit the government's growth target of about 5 percent this year.

's economy stabilized partly driven by the loosening of property sector policies,' said Zhiwei Zhang, chief economist of Pinpoint Asset Management.